Conversations about the economy and taxation have been difficult to avoid in recent weeks. Questions around how the UK will eventually return to normal – whatever that might now mean – after a lockdown are now absolutely critical.
We believe this is an ideal time for commercial real estate owners, whether they are owner-occupiers, fund managers or public sector owners, to consider their options to generate much-needed liquidity for their businesses or the projects they are responsible for. Signs of early green shoots have appeared with fundraising starting to take place as investors sense that it’s time to consider investing in real assets again.
As a new regulated stock exchange, IPSX is a solution for owners looking to generate that liquidity. It enables them to sell a stake in their investment, allowing them to recycle capital for new projects while retaining an interest in that first asset.
But it’s easy to forget that in the background, another trend is emerging. As we consider what ‘normal’ might be in the future, we should remember the tide is now turning on a significant area in the UK investment landscape: offshore funds.
Progress on the promotion of onshore structures is both welcome and long overdue. In March, the Investment Association and the Association of Real Estate Funds called on the government to create a professional investor fund structure, which would act as an onshore alternative to fund managers setting up in offshore jurisdictions. At IPSX, we fully support the industry’s move toward greater transparency and ensuring that UK-based assets remain in the UK. Moreover, we believe we are part of the solution.
Our second market, IPSX Wholesale, answers the problem for offshore funds that are looking for a UK-regulated market with all the benefits that brings. Wholesale can host a range of corporate structures for institutional-grade income-producing assets, development and regeneration projects alike.
The tide is turning on a significant area of the investment landscape: offshore funds
We wanted to ensure that real estate owners that decide to be quoted in an onshore, tax-transparent market benefit from as much flexibility as possible. As such, there is no prescribed minimum free float on admission, owners have the option of combining similar assets and, once admitted, they can opt for REIT status.
Unlike IPSX Prime, Wholesale is open specifically to institutional investors, allowing them to invest in CRE without the need for complicated agreements with the asset owners. In short, we want to ensure that both real estate owners and investors have a reason to be onshore.
The initiatives from the IA and AREF have been encouraging, and the OECD’s framework around base erosion and profit shifting, published last year, has done its part in making it increasingly inefficient to be offshore. At last, the response to tax avoidance is being met with concerted action from the industry, both at the national and international level.
For our part, IPSX Wholesale is one of those solutions that is ready to go. After years of working on this alternative to offshoring, we received the required authorisations from the FCA and became operational earlier this year. We are encouraging property owners to explore admission on IPSX Wholesale as we continue to push for greater flexibility, better governance and more transparency for real estate in the UK.
Roger Clarke is MD and head of capital markets at IPSX